An electronic trading system generally includes an electronic exchange in communication with one or more trading devices. The electronic exchange generally includes one or more centralized computers that receive, match, and process orders to buy or sell tradeable objects from traders, other electronic trading systems and/or other exchanges. Tradeable objects may include, for example, stocks, options, futures contracts, and commodities.
The electronic exchange transmits market data to the trading device. Market data includes, for example, data relating to a market for the tradeable object(s) to be traded, such as price data, market depth data, last traded quantity data, last traded price and data related to a market for the tradeable object.
The trading device provides a tool that allows the trader to participate in or view data relating to one or more markets. The trading device receives the market data from the electronic exchange. Some trading devices are configured to create interactive trading screens. In general, an interactive trading screen enables a user to submit a trade order to the electronic exchange, obtain a market quote, and monitor a position. The range and quality of features available on the interactive trading screen varies according to the specific software providing the interactive trading screen.
The trading device also or alternatively may not display the market data. For example, a trading device may be configured to provide an algorithmic trading platform and to derive aspects of a trade order (e.g., timing, price, and/or quantity of the order), and/or initiate and send a trade order without (or with very little) human intervention.
Upon receipt of a trade order or request for a transaction, the electronic exchange may enter the trade order into an exchange order book for matching against contra-side trade orders that also may be submitted to the electronic exchange for matching. By way of example, a sell order is contra-side to a buy order having the same price as the sell order. Similarly, a buy order is contra-side to a sell order with the same price. An unmatched quantity may be kept in the exchange order book until the quantity is matched, cancelled, deleted or otherwise removed. Upon matching, the electronic exchange may send confirmation to the trading device that trade order was matched.
A communication link may be provided between the trading device and the electronic exchange. The communication link may be a wired link, a wireless communication link, and combinations thereof. The communication link also may include one or more devices, such as networked computers, servers, gateways, order routers, and other related devices. The trading device and the electronic exchange may electronic communicate information according to a message format and messaging protocols, such as the TCP/IP protocol suite for the transport and network layers.
According to one type of trading communication, an order router may be assigned to administer communications between one or more trading devices and an electronic exchange. For example, a trader may sign onto or otherwise register with an electronic exchange via a trading device. An order router may be used for and/or to provide communications with the electronic exchange such as where a single order server may not connect directly to an electronic exchange (e.g., due to exchange rules or API limitations) or may connect with a limit to a number of transaction processing. During and/or after the registration, the order router may be assigned to administer communications between the trading device (or trading session) and the electronic exchange. Alternatively, the order router may be assigned to the trader prior to registration. The assignment between the order router and the trading device may be static or dynamic. That is, for a static assignment, the trading device, or order routing to the electronic exchange, is assigned to the specific order router. In a dynamic assignment, an order router is assigned for each order routed between the trading device and the electronic exchange. After the registration, transactions and other communications may be submitted between the trading device and the electronic exchange via the assigned order router.
A static assignment may have less overhead or require less processing cycles, and thus, a static assignment may provide faster order routing capabilities than a dynamic assignment, (i.e., the trading device is known). The order router may administer trade communications from multiple trading devices (and thus traders) to the electronic exchange. An amount of traffic handled by an order router may relate to the amount of volume or traffic from the trading devices to which it has been assigned. An order router that is assigned to trading devices that each has an increased volume may use increased processing overhead to handle the increased traffic. Limitations of the order router and/or the electronic exchange may introduce delays in the trade communications between an order router and the electronic exchange. Thus, a static assignment may increase a risk of an order being queued due to the order router being busy servicing another order or the order router may have reached or exceeded its throttling limit.
Thus, in general, it is desirable to improve one, some, or all of the components in the electronic trading system.